The fact that TKM has also postponed its desired aim of the double-digit market share by 2015, which was earlier slated to be attained by 2010, clearly shows how the Indian market is still a tough nut to crack for the company. Hiroshi Nakagawa, MD, TKM admits, “Toyota has been very slow in its approach when it comes to operating in the Indian market.”
However, he points out that the scenario at TKM is in a lot better state as compared to the headquarters and with the launch of its small car by end 2010, the situation is most likely to change very soon. In short, Toyota is planning to play the volume game. But will it succeed?
Toyota aims to produce around 70,000 units for this small car initially from a new plant and this will be ramped up to 1,00,000 units by 2011, 1,50,000 by 2012 and 2,00,000 by 2013. The fact that the company is very bullish on its success in the Indian market is clear. It has kept its investments intact and is investing around Rs.32 billion in setting up its second manufacturing facility in Bangalore to roll out the small car. However, recent news reports claim that the company has cut down on the proposed investments by one-fourth and now the company will invest Rs.24 billion in the second plant, near its existing factory at Bidadi on the outskirts of Bangalore, and not Rs.32 billion as announced in November. The existing plant has the capacity to produce up to 80,000 vehicles every year so one can definitely expect that capacity may not be a constraint for the company going ahead.
The company also plans to ramp up its dealership by as high as 65% by 2010 to increase its interface with its consumers. At present, Toyota has around 90 dealerships across the country and has firmed up plans to enhance the figure to 150 outlets, of which about 60% are expected to come up in semi-urban and rural locations. Keeping in mind the rising demand from semi-urban and rural areas, the company plans to expand to smaller cities, namely Allahabad, Srinagar, Shillong, Belgaum, Ambala, Tirupati, Meerut and Patna, before the launch of its small car.
"With rising rural sales and the approaching launch of the compact car, we believe that setting up dealerships in small towns is viable," asserts TKM’s General Manager (Sales), Sailesh Shetty. The company’s move of expanding its dealership network is rightfully supported by the launch of its small car as it''ll be then easily available to the consumer.
Nakagawa explains, “The aim of attaining the double-digit market share is closely related to the launch of the small car and once that happens, I believe we will be there before the target time.” It’s not Toyota alone which is going gung ho on the Indian compact car market; rivals like Ford, GM and Renault are also planning their respective small cars in the country around the same period. GM India will be launching their much-awaited Beat by early 2010 and same is the case with Ford Figo which was recently showcased in the country in the presence of Alan Mulally, President, Ford Motor Company. Time is definitely not on Toyota’s side, as the small car market has already got extremely crowded; and the company has no brand equity in this segment at all. GM has in fact strategised better than Toyota in this regard, with launches like Spark and U-VA. Moreover, the increasing competition in the SUV market may also pose a threat to the cushy position of TKM. In addition to the reloaded Endeavour from Ford’s stable, companies like Skoda, Hyundai, Volkswagen and Audi are going very bullish on the success of the Indian SUV market and have lined products to get their share of this pie. “The Indian SUV market still accounts for very low volumes as compared to passenger cars and will see a boost in the demand in the near future,” avows Pawan Goenka, President (Automotive), Mahindra & Mahindra.
Skoda is aiming to drive its Yeti into the Indian geographies by the first half of 2010. Similarly, Audi Q3, BMW X1 and Nissan Murano are expected to follow suit soon.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2009
However, he points out that the scenario at TKM is in a lot better state as compared to the headquarters and with the launch of its small car by end 2010, the situation is most likely to change very soon. In short, Toyota is planning to play the volume game. But will it succeed?
Toyota aims to produce around 70,000 units for this small car initially from a new plant and this will be ramped up to 1,00,000 units by 2011, 1,50,000 by 2012 and 2,00,000 by 2013. The fact that the company is very bullish on its success in the Indian market is clear. It has kept its investments intact and is investing around Rs.32 billion in setting up its second manufacturing facility in Bangalore to roll out the small car. However, recent news reports claim that the company has cut down on the proposed investments by one-fourth and now the company will invest Rs.24 billion in the second plant, near its existing factory at Bidadi on the outskirts of Bangalore, and not Rs.32 billion as announced in November. The existing plant has the capacity to produce up to 80,000 vehicles every year so one can definitely expect that capacity may not be a constraint for the company going ahead.
The company also plans to ramp up its dealership by as high as 65% by 2010 to increase its interface with its consumers. At present, Toyota has around 90 dealerships across the country and has firmed up plans to enhance the figure to 150 outlets, of which about 60% are expected to come up in semi-urban and rural locations. Keeping in mind the rising demand from semi-urban and rural areas, the company plans to expand to smaller cities, namely Allahabad, Srinagar, Shillong, Belgaum, Ambala, Tirupati, Meerut and Patna, before the launch of its small car.
"With rising rural sales and the approaching launch of the compact car, we believe that setting up dealerships in small towns is viable," asserts TKM’s General Manager (Sales), Sailesh Shetty. The company’s move of expanding its dealership network is rightfully supported by the launch of its small car as it''ll be then easily available to the consumer.
Nakagawa explains, “The aim of attaining the double-digit market share is closely related to the launch of the small car and once that happens, I believe we will be there before the target time.” It’s not Toyota alone which is going gung ho on the Indian compact car market; rivals like Ford, GM and Renault are also planning their respective small cars in the country around the same period. GM India will be launching their much-awaited Beat by early 2010 and same is the case with Ford Figo which was recently showcased in the country in the presence of Alan Mulally, President, Ford Motor Company. Time is definitely not on Toyota’s side, as the small car market has already got extremely crowded; and the company has no brand equity in this segment at all. GM has in fact strategised better than Toyota in this regard, with launches like Spark and U-VA. Moreover, the increasing competition in the SUV market may also pose a threat to the cushy position of TKM. In addition to the reloaded Endeavour from Ford’s stable, companies like Skoda, Hyundai, Volkswagen and Audi are going very bullish on the success of the Indian SUV market and have lined products to get their share of this pie. “The Indian SUV market still accounts for very low volumes as compared to passenger cars and will see a boost in the demand in the near future,” avows Pawan Goenka, President (Automotive), Mahindra & Mahindra.
Skoda is aiming to drive its Yeti into the Indian geographies by the first half of 2010. Similarly, Audi Q3, BMW X1 and Nissan Murano are expected to follow suit soon.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2009
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